SHANGHAI, Jul. 23 (SMM) – A recent SMM survey of 22 major domestic copper plate, sheet, strip, and foil producers (total capacity: around 1 million mt/yr) revealed the following insights:
1) June Average Operating Rate Down 6.7% MoM
The average operating rate during June at domestic copper plate, sheet, strip, and foil producers was 56.6%, down 6.7% MoM and 5.2% YoY. Consumption of copper plate, sheet, strip, and foil has been sluggish since mid-May as domestic demand for electronics, home appliances, and autos has been steadily falling. China's exports have also been negatively affected by the sluggish global economy as well as from the traditional European and US holiday period during July and August. According to NBS data, China's output of microcomputers equipments, computers, as well as mobile communication base station equipments, were down in June on a yearly basis. As consumption wanes further, finished goods inventories at domestic copper plate, sheet, strip, and foil producers have also risen to as high as 28.9% of production, which will force these producers to scale back output. In this context, SMM expects the average operating rate for these producers will continue to fall during July.
2) Raw Material Inventories Up Slightly in June
Raw material inventories during June at the surveyed increased marginally, rising to 19.8%. LME copper prices fell to USD 7,200/mt twice during June, and spot domestic copper prices fell below RMB 55,000/mt during most of the month as well, which stimulated some producers to increase raw material stocks. However, although downstream producers replenished stocks at low price levels, caution still dominated markets during June.